A long long time ago, all the ways back to August 2007 (for investors this is the equivalent of a millennium) the market gave us a present that normally comes along once every few years. I first wrote about this in August, again in September and again in November. The Tribune (TRB) deal closed in December.
Though highly unexpected, the market is apparently giving us another chance for all who missed out on the Christmas present. This one should arrive in time for Easter.
There is no point in rehashing the history of this deal as it bears no relevancy as to why the deal will close. What is important to know is that this deal was first announced towards the end of 2006. At the time, all the hurdles were spelled out and since then nothing new has crept up. This is very important and is a key ingredient in assessing arbitrage deals as spelled out in the 'ten commandments' article (see end of article for the commandments).
As of Wednesday, not only have all the regulatory requirements been put in place, but investors should note that mega shareholders #2 and #3 in Clear Channel (CCU-OLD) have been actively accumulating shares over the past 60 days. If there was even a ghost of a chance of this deal falling through, these boys would know. There is also no chance that they are accumulating to sell short or sell put options or any shenanigans at all. Neither UBS (#2) [28.9M shares or 5.8% from just under 5%] nor Highfields Capital Management LP (#3) [31.8M shares to 38.1M shares = +6.3M!] would chance trying to hide such an illegal endeavor and risk their reputation.
In these types of situations where a deal has been dragged out primarily due to regulatory issues, it is always best to follow the 'smart money' as for the timing of the closure. Of course in CCU's case the 'smart money' guys are the major shareholders that ironed out agreements with Bain Capital Partners and Thomas H. Lee Partners prior to committing their vote at the shareholders meeting. As an aside, once I learned that there were meetings and agreements in place with the major shareholders, from Bain's and Thomas Lee's perspective, this was a done deal. The sole risk was that either the FCC or the DOJ would make unacceptable demands and derail the deal. Since the opposite has occurred, once again the market is offering us a low risk high reward present.
If you are still not convinced, well all I can say is that Bain & Lee would say something before allowing CCU to consummate any part of the FCC requirements. Being that radio stations are being sold in compliance with the FCC ruling, this is a done deal.
Disclosure: Every Tom Dick & Harriet that I know or I am associated with is now long CCU.